This post first appeared as Blog post at FIN LAW.
The issuance of stablecoins, which derive their value directly from an official currency such as the euro or US dollar, will only be permitted in the European Union from June 30, 2024 in compliance with the new regulations Markets in Crypto Assets Regulation (MiCA) to be possible. As in the case of classic, non-tokenized e-money within the meaning of the Second E-Money Directive, strict requirements are also imposed on issuers of e-money tokens, which is why not every company is authorized to issue e-money tokens under MiCA will be.
Rather, this privilege will only be granted to authorized and supervised credit institutions and electronic money institutions. In Germany, under MiCA, a BaFin license is always required for the issuance of e-money tokens. However, MiCA also provides for further obligations for issuers of e-money tokens. For example, issuers must create a meaningful crypto white paper that contains the minimum information specified in MiCA so that the tokens can be offered publicly in Europe or admitted to trading on crypto exchange platforms, for example.
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MiCA sets content requirements for crypto white papers on e-money tokens
Before offering e-money tokens to the public in the European Union, the issuer must prepare a crypto white paper and publish it on its website. He must submit this to the authority responsible for him – in Germany, BaFin – no later than 20 working days before publication.
In the crypto white paper, the issuer of the e-money tokens has, among other things, information about itself and how the token works, about the nature of the planned public offering or admission to trading associated with the e-money tokens Rights and obligations to indicate the associated risks including the main adverse climate impacts of the underlying consensus mechanism.
In addition, the crypto white paper must contain numerous warnings, such as the lack of deposit insurance and the fact that the crypto white paper has not been approved by a regulatory authority. Overall, the crypto white paper must be formulated honestly and understandably and must not contain any misleading statements. The crypto white paper must be written in a language of the issuer’s country of origin or in a language commonly used in the international financial world. Especially if the e-money tokens are not only to be offered in Germany, it is advisable to create a crypto white paper in English.
Obligation to redeem and prohibition of interest as restrictions under private law
The MiCA also provides for obligations for issuers of e-money tokens from a private law perspective. In this respect, the redemption obligation anchored in the regulation is of crucial importance, which guarantees the holders of e-money tokens to the issuer the right to redeem the e-money tokens into legal currency at their nominal value at any time. Issuers with a BaFin license are not allowed to charge any fees for redemption.
The MiCA regulator is also strict with regard to the possibility of earning interest on balances in e-money tokens. Interest may not be granted in relation to e-money tokens. The ban on interest not only affects the issuers of the tokens, but also crypto service providers with a BaFin license, who are not allowed to grant interest in connection with the crypto services they provide. The MiCA clarifies that interest within the meaning of the interest ban should also include all remuneration and other benefits that are related to the ownership of e-money tokens.
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